SHORT TERM: pullback/correction continues, DOW -104
Overnight the Asian markets dropped 0.9%. Europe opened lower and lost 0.7%. US index futures were lower overnight. At 8:30 weekly Jobless claims were reported higher: 368k v 298k, Retail sales were reported higher: +0.7% v +0.4%, Export prices were higher: +0.1% v -0.4%, but Import prices were flat: 0.0% v 0.0%. The market opened flat at SPX 1780, bounced to 1783, then made lower lows. At 10:00 Business inventories were reported higher: +0.7% v +0.6%. By 10:30 the SPX had hit 1776. It then bounced to SPX 1781, but rolled over again hitting 1772 by 12:30. After that it started to rally. The rally lasted until 3pm when the SPX hit 1783. Then a pullback into the close ended the day at SPX 1776.
For the day the SPX/DOW were -0.50%, and the NDX/NAZ were -0.20%. Bonds lost 10 ticks, Crude was flat, Gold dropped $25, and the USD was higher. Medium term support drops to the 1699 and 1680 pivots, with resistance at the 1779 and 1828 pivots. Tomorrow: the PPI at 8:30.
The market opened flat, bounced, and then broke below SPX 1775 on its way to 1772. This was an important move, in that SPX 1775 was the high of the previous third wave. Recall from the August low, in the SPX, what have counted five waves: 1730-1676-1775-1746-1814. The drop today below 1775 creates an overlap, suggesting that the five waves have completed. In the DOW we have a similar count, but from the October low. It now appears, as suspected, either Int. one of Major 5 or Int. five of Major 5 ended at SPX 1814. Normally we would be expecting a downtrend to be underway. But in recent months this trifurcated market has been anything but normal. Should the SPX continue lower and drop below 1746, there is a good chance we will get a downtrend confirmation.
Short term support drops to SPX 1746 and SPX 1730, with resistance now at the 1779 pivot and SPX 1814. Short term momentum bounced from extremely oversold to neutral, during the rally, then headed lower. Short term OEW charts remain negative with reversal level now SPX 1791. Best to your trading!
MEDIUM TERM: uptrend weakening
LONG TERM: bull market